– Record Revenue of $36.3 million, up 11% year-over-year
– Record Gross Margin of $7.1 million, up 15% year-over-year
– EBITDA of $2.1 million, up 53% year-over-year
– EPS of $0.09 per diluted share, up approximately 200% year-over-year
– Reiterate 2012 guidance; anticipates 15-20% organic revenue growth over 2011
TORONTO, Aug. 8, 2012 (GLOBE NEWSWIRE) -- Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), owner of the loyalty reward management program platform www.Points.com, today announced results for the second quarter ended June 30, 2012.
"We are pleased with our second quarter, which saw improved performance across all key financial metrics. Revenues, gross margin dollars, EBITDA, and net income are all up sequentially and year over year," said Points Chief Executive Officer Rob MacLean. "Points delivered record revenues and gross margins, and at the same time, saw increased profitability as demonstrated by our improvement in EBITDA and EPS, which increased 53% and 200% year-over-year, respectively. Contributing to our financial performance is the addition of new partners and products to our platform over the past twelve months as well as the continued growth of our deployed products."
Mr. MacLean continued, "Looking to the back half of the year, we anticipate continued acceleration in our financial performance led by strong organic growth in our core loyalty currency services business. In addition to driving strong organic growth, we are working diligently to execute against our robust pipeline of new business. Both the value and visibility of our new business pipeline has increased in the past 90 days with several relationships in advanced stages of development. As a result, we expect meaningful new business launches in the back-half of the year. We look forward to being able to share our successes over the coming quarters and remain confident that we will continue to deliver solid progress for our shareholders."
Second Quarter 2012 Financial Results
Total revenue was $36.3 million for the second quarter of 2012. Revenue was up 11% year-over-year from $32.7 million in the second quarter of 2011 and up 30.0% sequentially from $28.0 million in the first quarter of 2012. Principal revenue totaled $34.2 million, up 11% from $30.8 million in same period last year and up 35% from $25.3 million in the first quarter 2012. Other partner revenue was $2.1 million, up 8.0% from $2.0 million in the second quarter 2011 and down 21.5% from $2.7 million in the first quarter 2012.
Gross margin for the second quarter 2012 totaled $7.1 million, or 19.6% of total revenue. This represents a 15% increase from $6.2 million, or 19.0% of total revenue, in the second quarter 2011 and an 11% increase from $6.4 million, or 22.8% of total revenue, in the first quarter 2012. The sequential change in gross margin percentage is a reflection of the rotation of sales from seasonal Q1 products and higher agency activity to a more typical mix with principal revenue comprising 94% of total revenue.
EBITDA for the second quarter 2012 was $2.1 million, up 53% year-over-year from $1.4 million in the second quarter 2011 and up 88% from $1.1 million in the first quarter 2012. This year-over-year and sequential increase is attributed to strong gross margins combined with minimal increases in operating costs.
Net income for the second quarter of 2012 was $1.3 million, or $0.09 per share. This compares to net income of $0.5 million, or $0.03 per share in the second quarter 2011, and net income of $0.6 million, or $0.04 per share, in the first quarter 2012.
As of June 30, 2012, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash and amounts with payment processors, was $44.0 million, down from $45.6 million at March 31, 2012. The company remains debt free and is pleased with its overall financial position.
| Second Quarter 2012 Business Metrics | ||||||||||
| Q2/12 | Q2/11 |
Q2/12 vs. Q2/11 |
Q1/12 |
Q2/12 vs. Q1/12 |
||||||
| TOTAL ALL CHANNELS | ||||||||||
| Points/Miles Transacted (in 000s) | 3,455,853 | 3,641,292 | (5%) | 3,755,710 | (8%) | |||||
| No. of Points/Miles Transactions | 390,244 | 347,134 | 12% | 364,176 | 7% | |||||
| LOYALTY CURRENCY SERVICES | ||||||||||
| Points/Miles Transacted (in 000s) | 3,056,598 | 3,319,885 | (8%) | 3,282,092 | (7%) | |||||
| No. of Points/Miles Transactions | 328,722 | 329,561 | (0%) | 344,245 | (5%) | |||||
| POINTS.COM CHANNELS | ||||||||||
| Points/Miles Transacted (in 000s) | 399,255 | 321,407 | 24% | 473,618 | (16%) | |||||
| No. of Points/Miles Transactions | 61,522 | 17,573 | 250% | 19,931 | 209% | |||||
| Cumulative Registered Users | 3,235,685 | 2,724,144 | 19% | 3,087,282 | 5% | |||||
Investor Conference Call
Points' conference call with investors will be held today at 5:00 p.m. Eastern Time. To participate, investors from the US and Canada should dial (877) 941-1427 ten minutes prior to the start time. International dialers should call (480) 629-9664.
In addition, the call is being webcast and can be accessed at the Company's web site: www.pointsinternational.com and will be archived online upon completion of the call. A telephonic replay of the conference call will be available through August 22, 2012 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 4548122.
About Points International Ltd.
Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), is the owner and operator of Points.com, the global leader in reward currency management providing multiple eCommerce and technology solutions to the world's top loyalty brands. Points.com also manages the largest consumer rewards management platform, allowing more than 3 million users to trade, track, exchange, and redeem their loyalty points, miles, and rewards. Recently, Points International was the recipient of several prestigious awards; the Company was named the 5th largest Canadian software company and the 40th largest Canadian technology company by the 2012 Branham300 list as well as ranked 40th by PROFIT Magazine's top 200 Canadian companies by five-year revenue growth for 2012.
Points.com's solutions enable the management and monetization of loyalty currencies, including frequent flyer miles, hotel points, retailer rewards and credit card points, as well as enhancing loyalty program consumer offerings and back-end operations for more than 40 partners worldwide. Further, Points.com's SaaS products allow eCommerce merchants to add loyalty solutions to their online stores and reward customers for purchases.
For more information on Points.com, visit www.pointsinternational.com, follow us on Twitter (@pointsadvisor), fan us on Facebook (www.facebook.com/pointsfans) or read our blog (http://blog.points.com).
Caution Regarding Forward-Looking Statements
This press release contains or incorporates forward-looking statements within the meaning of United States securities legislation, and forward-looking information within the meaning of Canadian securities legislation (collectively "forward-looking statements"). These forward-looking statements include our guidance for 2012 with respect to organic revenue growth, the size of our pipeline opportunity and our operating leverage. These statements are not historical facts but instead represent only Points' expectations, estimates and projections regarding future events.
Although Points believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions or estimates are applied in making forward-looking statements, and may not prove to be correct. In particular, the financial outlooks herein assume we will be able to generate new business from our pipeline at expected margins, our in-market and newly launched products and services will perform in a manner consistent with the Company's past experience and we will be able to contain costs. Our ability to convert our pipeline of prospective partners and product launches is subject to significant risk and there can be no assurance that we will launch new partners or new products with existing partners as expected or planned. Other important risk factors that could cause actual results to differ materially include the risk factors discussed in Points' annual information form, Form-40-F, annual and interim management's discussion and analysis, and annual and interim financial statements and the notes thereto. These documents are available at www.sedar.com and www.sec.gov.
The forward-looking statements contained in this press release are made as at the date of this release and, accordingly, are subject to change after such date. Except as required by law, Points does not undertake any obligation to update or revise any forward-looking statements made or incorporated in this press release, whether as a result of new information, future events or otherwise.
| Points International Ltd. | ||||||||
| Key Financial Measures and Schedule of Non-GAAP Reconciliations | ||||||||
| Gross Margin1 | ||||||||
| Expressed in thousands of United States dollars | For the three months ended | For the six months ended | ||||||
| June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||
| Total revenue | $ 36,329 | $ 32,725 | $ 64,367 | $ 61,198 | ||||
| Direct cost of principal revenue | 29,192 | 26,519 | 50,824 | 49,904 | ||||
| Gross margin | $ 7,137 | $ 6,206 | $ 13,543 | $ 11,294 | ||||
| Gross margin % | 20% | 19% | 21% | 18% | ||||
| Reconciliation of Operating Income to EBITDA2 | ||||||||
| Expressed in thousands of United States dollars | For the three months ended | For the six months ended | ||||||
| June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||
| Operating income | $ 1,373 | $ 834 | $ 1,874 | $ 770 | ||||
| Depreciation and amortization | 699 | 563 | 1,360 | 1,008 | ||||
| Foreign exchange loss (gain) | 29 | (24) | (16) | (92) | ||||
| EBITDA | $ 2,101 | $ 1,373 | $ 3,218 | $ 1,686 | ||||
| 1Gross Margin is considered by Management to be an integral measure of financial performance and is defined as total revenues less the direct cost of principal revenues. However, gross margin is not a recognized measure of profitability under IFRS. | ||||||||
| 2EBITDA (Earnings before interest, taxes, depreciation and amortization, and foreign exchange) is considered by management to be a useful supplemental measure of performance. However, EBITDA is not a recognized earnings measure under IFRS. | ||||||||
| Points International Ltd. | ||||||||
| Condensed Consolidated Interim Statements of Comprehensive Income | ||||||||
| Expressed in thousands of United States dollars, except per share amounts |
For the three months ended |
For the six months ended |
||||||
| (Unaudited) | June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | ||||
| REVENUE | ||||||||
| Principal | $ 34,208 | $ 30,766 | $ 59,548 | $ 57,463 | ||||
| Other partner revenue | 2,112 | 1,955 | 4,801 | 3,726 | ||||
| Interest | 9 | 4 | 18 | 9 | ||||
| Total Revenue | 36,329 | 32,725 | 64,367 | 61,198 | ||||
| EXPENSES | ||||||||
| Direct cost of principal revenue | 29,192 | 26,519 | 50,824 | 49,904 | ||||
| Employment costs | 3,610 | 3,258 | 7,204 | 6,502 | ||||
| Marketing & communications | 373 | 348 | 779 | 627 | ||||
| Technology services | 118 | 156 | 252 | 302 | ||||
| Depreciation and amortization | 699 | 563 | 1,360 | 1,008 | ||||
| Foreign exchange loss (gain) | 29 | (24) | (16) | (92) | ||||
| Operating expenses | 935 | 1,071 | 2,090 | 2,177 | ||||
| Total Expenses | 34,956 | 31,891 | 62,493 | 60,428 | ||||
| OPERATING INCOME | 1,373 | 834 | 1,874 | 770 | ||||
| Interest and other charges | -- | (17) | -- | (17) | ||||
| EARNINGS BEFORE INCOME TAX | 1,373 | 851 | 1,874 | 787 | ||||
| Deferred income tax expense (recovery) | 69 | 350 | (4) | 475 | ||||
| NET INCOME | 1,304 | 501 | 1,878 | 312 | ||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
| Gain (loss) on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $3 and $15 for the three and six months ended June 30, 2012 (2011 – recovery of $10 and expense of $50) | 7 | (26) | 41 | 127 | ||||
| Reclassification to net income of gain on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $4 and $22 for the three and six months ended June 30, 2012 (2011 – $46 and $92) | (12) | (116) | (63) | (234) | ||||
| Other comprehensive loss for the period, net of income tax | (5) | (142) | (22) | (107) | ||||
| TOTAL COMPREHENSIVE INCOME | $ 1,299 | $ 359 | $ 1,856 | $205 | ||||
| EARNINGS PER SHARE | ||||||||
| Basic earnings per share | $ 0.09 | $ 0.03 | $ 0.12 | $ 0.02 | ||||
| Diluted earnings per share | $ 0.09 | $ 0.03 | $ 0.12 | $ 0.02 | ||||
| Points International Ltd. | ||||
| Condensed Consolidated Interim Balance Sheets | ||||
| Expressed in thousands of United States dollars | ||||
| (Unaudited) | ||||
| As at | June 30, 2012 | December 31, 2011 | ||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | 32,640 | 34,853 | ||
| Restricted cash | 1,617 | 1,619 | ||
| Funds receivable from payment processors | 6,759 | 10,837 | ||
| Security deposits | 2,942 | 2,461 | ||
| Accounts receivable | 1,615 | 2,411 | ||
| Prepaid expenses and other assets | 1,006 | 1,013 | ||
| Total current assets | 46,579 | 53,194 | ||
| Non-current assets | ||||
| Property and equipment | 1,770 | 1,712 | ||
| Intangible assets | 3,768 | 4,566 | ||
| Goodwill | 2,580 | 2,580 | ||
| Deferred tax assets | 1,593 | 1,575 | ||
| Note receivable | 255 | -- | ||
| Other assets | 618 | 658 | ||
| Total non-current assets | 10,584 | 11,091 | ||
| Total assets | 57,163 | 64,285 | ||
| LIABILITIES | ||||
| Current liabilities | ||||
| Accounts payables and accrued liabilities | 2,822 | 3,455 | ||
| Payable to loyalty program partners | 31,373 | 40,048 | ||
| Provisions | 56 | 98 | ||
| Current portion of other liabilities | 596 | 765 | ||
| Total current liabilities | 34,847 | 44,366 | ||
| Non-current liabilities | ||||
| Other liabilities | 801 | 877 | ||
| Total non-current liabilities | 801 | 877 | ||
| Total liabilities | 35,648 | 45,243 | ||
| SHAREHOLDERS' EQUITY | ||||
| Share capital | 57,992 | 57,378 | ||
| Contributed surplus | 9,674 | 9,671 | ||
| Accumulated other comprehensive income | 21 | 43 | ||
| Accumulated deficit | (46,172) | (48,050) | ||
| Total shareholders' equity | 21,515 | 19,042 | ||
| Total liabilities and shareholders' equity | 57,163 | 64,285 | ||
| Points International Ltd. | ||||||||||||||
| Condensed Consolidated Interim Statements of Changes in Equity | ||||||||||||||
| Attributable to equity holders of the Company | ||||||||||||||
| Expressed in thousands of United States dollars | Share Capital |
Contributed Surplus |
Total Capital |
Unrealized gains/(losses) on cash flow hedges |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
Total shareholders' equity |
|||||||
| (Unaudited) | ||||||||||||||
| Balance at December 31, 2011 | $ 57,378 | $ 9,671 | $ 67,049 | $ 43 | $ 43 | $ (48,050) | $ 19,042 | |||||||
| Net income | -- | -- | -- | -- | -- | 1,878 | 1,878 | |||||||
| Other comprehensive loss | -- | -- | -- | (22) | (22) | -- | (22) | |||||||
| Total comprehensive income | -- | -- | -- | (22) | (22) | 1,878 | 1,856 | |||||||
| Effect of share option compensation plan | -- | 335 | 335 | -- | -- | -- | 335 | |||||||
| Effect of RSU compensation plan | -- | 84 | 84 | -- | -- | -- | 84 | |||||||
| Share issuances | 1,103 | (416) | 687 | -- | -- | -- | 687 | |||||||
| Share capital held in trust | (489) | -- | (489) | -- | -- | -- | (489) | |||||||
| Balance at June 30, 2012 | $ 57,992 | $ 9,674 | $ 67,666 | $ 21 | $ 21 | $ (46,172) | $ 21,515 | |||||||
| Balance at December 31, 2010 | $ 56,683 | $ 9,255 | $ 65,938 | $ 297 | $ 297 | $ (52,082) | $ 14,153 | |||||||
| Net income | -- | -- | -- | -- | -- | 312 | 312 | |||||||
| Other comprehensive loss | -- | -- | -- | (107) | (107) | -- | (107) | |||||||
| Total comprehensive income | -- | -- | -- | (107) | (107) | 312 | 205 | |||||||
| Effect of share option compensation plan | -- | 332 | 332 | -- | -- | -- | 332 | |||||||
| Share issuances | 605 | (146) | 459 | -- | -- | -- | 459 | |||||||
| Balance at June 30, 2011 | $ 57,288 | $ 9,441 | $ 66,729 | $ 190 | $ 190 | $ (51,770) | $ 15,149 | |||||||
| Points International Ltd. | ||||||||
| Condensed Consolidated Interim Statements of Cash Flows | ||||||||
| Expressed in thousands of United States dollars | For the three months Ended | For the six months Ended | ||||||
| (Unaudited) |
June 30, 2012 |
June 30, 2011 |
June 30, 2012 |
June 30, 2011 |
||||
| Cash flows from operating activities | ||||||||
| Net income for the period | $ 1,304 | $ 501 | $ 1,878 | $ 312 | ||||
| Adjustments for: | ||||||||
| Depreciation of property and equipment | 138 | 127 | 269 | 230 | ||||
| Amortization of intangible assets | 561 | 436 | 1,091 | 778 | ||||
| Unrealized foreign exchange (gain) loss | (347) | 738 | (84) | 394 | ||||
| Equity-settled share-based payment transactions | 201 | 163 | 419 | 332 | ||||
| Deferred income tax expense (recovery) | 73 | 350 | (10) | 475 | ||||
| Unrealized net gain on derivative contracts designated as cash flow hedges | (6) | (198) | (29) | (150) | ||||
| Changes in non-cash balances related to operations | (6,523) | (1,410) | (5,155) | 981 | ||||
| Net cash (used in) provided by operating activities | (4,599) | 707 | (1,621) | 3,352 | ||||
| Cash flows from investing activities | ||||||||
| Acquisition of property and equipment | (144) | (308) | (328) | (468) | ||||
| Additions to intangible assets | (170) | (291) | (293) | (807) | ||||
| Issuance of note | (255) | -- | (255) | -- | ||||
| Net cash used in investing activities | (569) | (599) | (876) | (1,275) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from exercise of share options | 318 | 410 | 687 | 458 | ||||
| Proceeds used for share purchases | (489) | -- | (489) | -- | ||||
| Net cash (used in) provided by financing activities | (171) | 410 | 198 | 458 | ||||
| Net (decrease) increase in cash and cash equivalents | (5,339) | 518 | (2,299) | 2,535 | ||||
| Cash and cash equivalents at beginning of the period | 37,622 | 30,810 | 34,853 | 28,463 | ||||
| Effect of exchange rate fluctuations on cash held | 357 | (735) | 86 | (405) | ||||
| Cash and cash equivalents at end of the period | $ 32,640 | $ 30,593 | $ 32,640 | $ 30,593 | ||||
| Interest Received | 8 | 4 | 18 | 10 | ||||
| Interest Paid | -- | -- | -- | -- | ||||